HON INDUSTRIES Announces Results for First Quarter - Fiscal 2001

Apr 18, 2001, 01:00 ET from HON INDUSTRIES Inc.

    MUSCATINE, Iowa, April 18 /PRNewswire/ -- HON INDUSTRIES Inc. (NYSE:   HNI)
 today announced sales of $462.0 million for the first quarter of fiscal year
 2001 ending March 31.  Earnings per share for the first quarter were in line
 with consensus estimates of $0.31.  "The softer economy has had an effect on
 our business," stated Jack Michaels, HON INDUSTRIES Chairman, President and
 CEO.  "We are continuing our focus on long-term shareholder value by
 streamlining our processes and operations, introducing innovative new
 products, and reducing our cost structure to position us for the future."
 
 
     FIRST QUARTER 2001
 
           FINANCIAL HIGHLIGHTS (in millions, except per share data)
 
                                                Three Months Ended
                                     March 31,       March 31,
                                       2001            2000        % change
     Net sales                        $462.0          $481.5         - 4.1
     Operating income                  $31.2           $40.9        - 23.6
     Net earnings                      $18.3           $24.5        - 25.6
     Earnings per share -diluted       $0.31           $0.41        - 24.4
 
     Operating Performance
     As a percent of sales, gross margins for the first quarter increased to
 32.5 percent from 31.6 percent for the same quarter last year, primarily due
 to the acquisition of Hearth Services in March of 2000, which has a positive
 impact on gross margins.  Selling and administrative expenses for the quarter
 were 25.8 percent compared with 23.1 percent in 2000.  This increase is due in
 large part to having three months of Hearth Services expenses this year
 compared to just one month during the first quarter of 2000, lower overall
 sales volume and continued investment in sales and marketing expenses
 associated with the company's simplify, focus and branding strategy.
     Cash flow from operations for the quarter was $19.7 million.  Capital
 expenditures for the quarter decreased to $12.7 million.  The Company
 repurchased approximately 807,000 shares of its common stock during the first
 quarter.
 
     Office Furniture
     For the quarter, sales for HON INDUSTRIES' office furniture were down
 8 percent as the office furniture market continued to experience softness due
 to the economic downturn.  First quarter sales were softer than anticipated
 primarily due to the retail sector.  Improvements in both price realization,
 cost management and enhanced logistics capabilities are mitigating the impact
 of the slowing economy.
     The contract office furniture sector of the market became sluggish at the
 end of the first quarter as businesses began delaying office furniture
 purchases.  "We remain confident that we have a winning contract sector
 strategy and we are committed to effectively executing this strategy in order
 to create long-term shareholder value," stated Mr. Michaels.
 
     Hearth Products
     Net sales in the first quarter for the Hearth Products segment increased
 almost 15 percent to $95.5 million compared to $83.2 million in the first
 quarter of last year.  Excluding the acquisition of Hearth Services, net sales
 for the first quarter were down nearly 5 percent when compared to the same
 period a year ago.  "The new business simplification structure that was
 implemented last quarter has been well received by our hearth distributors and
 end-user customers, bringing a renewed focus to our hearth division," stated
 Mr. Michaels.
     Hearth Technologies won many of the prestigious "Vesta Awards," including
 most creative overall new product, at the recent Hearth Products Association
 show in Salt Lake City.  The "Vesta Awards" recognize the best and most
 creative new products in the hearth industry.
 
     2001 Outlook
     Long-term value creation strategies continue to be a vital part of the
 Company's future.  The Company is focused on optimizing their 2001
 performance, while continuing to follow their long-term strategies, which have
 been the cornerstone of their success.  "We have the highest service levels
 ever with our distributor-partners, both complete-and-on-time and quality are
 at their highest levels ever.  New product rollouts will be key to building
 for the future.  We will introduce a record number of new products this year,"
 stated Mr. Michaels.  The Company anticipates that the second quarter will
 also be challenging in both sales and profits due to the economic environment.
 The Company has built a solid foundation based on its many dedicated
 member-owners that will allow it to be ready when opportunity re-emerges with
 a reinvigorated economy.
 
     Conference Call
     HON INDUSTRIES will host a conference call on Wednesday, April 18, 2001,
 at 10:00 a.m. (CST) to discuss the first quarter fiscal 2001 results.  To
 participate, call the conference call line at 888-390-3401, pass code is #HNI.
 A replay of the conference call will be available until Wednesday, April 25,
 2001.  To access this replay dial 888-397-5651, pass code is 2654.  A link to
 the simultaneous webcast can be found on the company's website at
 http://www.honi.com
 
     HON INDUSTRIES Inc. is the nation's largest producer of value-priced
 office furniture and the third largest office furniture manufacturer in North
 America.  HON INDUSTRIES is also the nation's leading manufacturer and
 marketer of gas- and wood-burning fireplaces.  HON INDUSTRIES is well
 positioned, with strong brand names, in fast growing segments of the core
 businesses in which it competes.  The company provides its customers a broad
 selection of quality products, with quick delivery, at attractive prices.  HON
 INDUSTRIES has a strong commitment to customer satisfaction and to enhancing
 shareholder value.  HON INDUSTRIES was named one of the 400 Best Big Companies
 in America by Forbes' Magazine in 2001, and one of the World's Top 100
 Best-Managed Companies by IndustryWeek for 2000.
 
     Forward-looking Statements
     Statements in this news release that are not strictly historical,
 including statements as to plans, objectives, and future financial
 performance, are "forward-looking" statements that are made pursuant to the
 safe harbor provisions of the Private Securities Litigation Reform Act of
 1995.  Forward-looking statements involve known and unknown risks, which may
 cause the Company's actual results in the future to differ materially from
 expected results, particularly those with respect to expected earnings for the
 remainder of the fiscal year.  These risks include, among others:  the
 Company's ability to realize financial benefits from reducing its cost
 structure to achieve expected financial benefit from its contract sector
 strategy, to introduce and obtain sales from new products; and other factors
 described in the Company's annual and quarterly reports filed with the
 Securities and Exchange Commission on Forms 10-K and 10-Q.
 
 
                                 HON INDUSTRIES
            Unaudited Condensed Consolidated Statement of Operations
 
     (Dollars in thousands, except per               Three Months Ended
      share data)                              Mar. 31, 2001   Apr. 1, 2000(a)
     Net sales(b)                                $461,997         $481,523
     Cost of products sold                        311,711          329,416
     Gross profit                                 150,286          152,107
     Selling and administrative expenses(b)       119,050          111,214
     Operating income                              31,236           40,893
     Interest income                                  222              289
     Interest expense                               2,922            2,839
     Income before income taxes                    28,536           38,343
     Income taxes                                  10,273           13,803
     Net income                                   $18,263          $24,540
     Net income per common share                    $0.31            $0.41
     Average number of common shares
      outstanding                              59,448,220       60,185,851
 
     (a) Includes results of operations of American Fireplace Company and the
         Allied Group acquired February 29, 2000.
     (b) Restated to include shipping and handling costs billed to customers as
         revenue versus an offset to expense per EITF issue No. 00-10.
 
 
            Unaudited Condensed Consolidated Statement of Cash Flows
 
     (Dollars in thousands)                           Three Months Ended
                                                  Mar. 31, 2001   Apr. 1, 2000
     Net cash flows from (to) operating activities    $19,663         $28,821
     Net cash flows from (to) investing activities:
       Capital expenditures                           (12,720)        (16,023)
       Other (primarily acquisitions)                  (6,744)       (134,660)
     Net cash flows from (to) financing activities     15,195         123,127
     Net increase (decrease) in cash and cash
      equivalents                                      15,394           1,265
     Cash and cash equivalents at beginning of period   3,181          22,168
     Cash and cash equivalents at end of period       $18,575         $23,433
 
 
                 Unaudited Condensed Consolidated Balance Sheet
 
     Assets                              Liabilities and Shareholders' Equity
                           As of                                As of
                     Mar. 31,   Dec. 30,                 Mar. 31,    Dec. 30,
     (Dollars in
      thousands)      2001        2000                     2001        2000
     Cash and cash                       Current
      equivalents    $18,575      $3,181  liabilities    $207,875    $264,868
     Receivables     177,592     211,243 Long-term debt   161,648     126,093
     Inventories      79,515      84,360 Capital lease
                                          obligations       1,343       2,192
     Deferred                            Other long-term
      income taxes    19,892      19,516  liabilities      19,620      18,749
     Prepaid expenses                    Deferred income
      and other                           taxes            35,755      37,226
      current
      assets          11,825      11,841
       Current                             Total
        assets      $307,399    $330,141   liabilities    426,241     449,128
 
                                         Capital stock     59,250      59,797
                                         Paid-in capital    4,278      17,339
     Property and
      equipment -                        Retained
      net            448,506     454,312  earnings        506,920     495,796
     Goodwill        221,420     216,371 Accumulated other
     Other assets     19,577      21,646  comprehensive
                                          income              213         410
                                            Total
                                             shareholder's
                                             equity       570,661     573,342
                                            Total
                                             liabilities and
       Total                                 shareholders'
        assets      $996,902  $1,022,470     equity      $996,902  $1,022,470
 
 
                          Unaudited Business Segment Data
 
                                                      Three Months Ended
     (Dollars in thousands)                    Mar. 31, 2001      Apr. 1, 2000
     Net sales:
       Office Furniture                           $366,509           $398,288
       Hearth products                              95,488             83,235
                                                  $461,997           $481,523
     Operating Profit:
       Office furniture                            $32,524            $38,572
       Hearth products                               3,238              4,770
         Total operating profit                     35,762             43,342
       Unallocated corporate expense                (7,227)            (4,999)
         Income before income taxes                $28,535            $38,343
     Identifiable Assets:
       Office furniture                           $590,319           $671,284
       Hearth products                             340,380            336,274
       General corporate                            66,203             56,745
                                                  $996,902         $1,064,303
     Depreciation & Amortization Expense:
       Office furniture                            $14,877            $14,374
       Hearth products                               5,126              3,599
       General corporate                               580                526
                                                   $20,583            $18,499
     Capital Expenditure - Net
       Office furniture                             $9,716            $10,478
       Hearth products                               2,922              4,554
       General corporate                                82                991
                                                   $12,720            $16,023
 
     For more information, contact Jerald K. Dittmer, Vice President - Finance,
 319-264-7400, or James P. McKeone, Investor Relations Mgr., 319-264-7669, both
 of HON INDUSTRIES Inc.
 
 

SOURCE HON INDUSTRIES Inc.
    MUSCATINE, Iowa, April 18 /PRNewswire/ -- HON INDUSTRIES Inc. (NYSE:   HNI)
 today announced sales of $462.0 million for the first quarter of fiscal year
 2001 ending March 31.  Earnings per share for the first quarter were in line
 with consensus estimates of $0.31.  "The softer economy has had an effect on
 our business," stated Jack Michaels, HON INDUSTRIES Chairman, President and
 CEO.  "We are continuing our focus on long-term shareholder value by
 streamlining our processes and operations, introducing innovative new
 products, and reducing our cost structure to position us for the future."
 
 
     FIRST QUARTER 2001
 
           FINANCIAL HIGHLIGHTS (in millions, except per share data)
 
                                                Three Months Ended
                                     March 31,       March 31,
                                       2001            2000        % change
     Net sales                        $462.0          $481.5         - 4.1
     Operating income                  $31.2           $40.9        - 23.6
     Net earnings                      $18.3           $24.5        - 25.6
     Earnings per share -diluted       $0.31           $0.41        - 24.4
 
     Operating Performance
     As a percent of sales, gross margins for the first quarter increased to
 32.5 percent from 31.6 percent for the same quarter last year, primarily due
 to the acquisition of Hearth Services in March of 2000, which has a positive
 impact on gross margins.  Selling and administrative expenses for the quarter
 were 25.8 percent compared with 23.1 percent in 2000.  This increase is due in
 large part to having three months of Hearth Services expenses this year
 compared to just one month during the first quarter of 2000, lower overall
 sales volume and continued investment in sales and marketing expenses
 associated with the company's simplify, focus and branding strategy.
     Cash flow from operations for the quarter was $19.7 million.  Capital
 expenditures for the quarter decreased to $12.7 million.  The Company
 repurchased approximately 807,000 shares of its common stock during the first
 quarter.
 
     Office Furniture
     For the quarter, sales for HON INDUSTRIES' office furniture were down
 8 percent as the office furniture market continued to experience softness due
 to the economic downturn.  First quarter sales were softer than anticipated
 primarily due to the retail sector.  Improvements in both price realization,
 cost management and enhanced logistics capabilities are mitigating the impact
 of the slowing economy.
     The contract office furniture sector of the market became sluggish at the
 end of the first quarter as businesses began delaying office furniture
 purchases.  "We remain confident that we have a winning contract sector
 strategy and we are committed to effectively executing this strategy in order
 to create long-term shareholder value," stated Mr. Michaels.
 
     Hearth Products
     Net sales in the first quarter for the Hearth Products segment increased
 almost 15 percent to $95.5 million compared to $83.2 million in the first
 quarter of last year.  Excluding the acquisition of Hearth Services, net sales
 for the first quarter were down nearly 5 percent when compared to the same
 period a year ago.  "The new business simplification structure that was
 implemented last quarter has been well received by our hearth distributors and
 end-user customers, bringing a renewed focus to our hearth division," stated
 Mr. Michaels.
     Hearth Technologies won many of the prestigious "Vesta Awards," including
 most creative overall new product, at the recent Hearth Products Association
 show in Salt Lake City.  The "Vesta Awards" recognize the best and most
 creative new products in the hearth industry.
 
     2001 Outlook
     Long-term value creation strategies continue to be a vital part of the
 Company's future.  The Company is focused on optimizing their 2001
 performance, while continuing to follow their long-term strategies, which have
 been the cornerstone of their success.  "We have the highest service levels
 ever with our distributor-partners, both complete-and-on-time and quality are
 at their highest levels ever.  New product rollouts will be key to building
 for the future.  We will introduce a record number of new products this year,"
 stated Mr. Michaels.  The Company anticipates that the second quarter will
 also be challenging in both sales and profits due to the economic environment.
 The Company has built a solid foundation based on its many dedicated
 member-owners that will allow it to be ready when opportunity re-emerges with
 a reinvigorated economy.
 
     Conference Call
     HON INDUSTRIES will host a conference call on Wednesday, April 18, 2001,
 at 10:00 a.m. (CST) to discuss the first quarter fiscal 2001 results.  To
 participate, call the conference call line at 888-390-3401, pass code is #HNI.
 A replay of the conference call will be available until Wednesday, April 25,
 2001.  To access this replay dial 888-397-5651, pass code is 2654.  A link to
 the simultaneous webcast can be found on the company's website at
 http://www.honi.com
 
     HON INDUSTRIES Inc. is the nation's largest producer of value-priced
 office furniture and the third largest office furniture manufacturer in North
 America.  HON INDUSTRIES is also the nation's leading manufacturer and
 marketer of gas- and wood-burning fireplaces.  HON INDUSTRIES is well
 positioned, with strong brand names, in fast growing segments of the core
 businesses in which it competes.  The company provides its customers a broad
 selection of quality products, with quick delivery, at attractive prices.  HON
 INDUSTRIES has a strong commitment to customer satisfaction and to enhancing
 shareholder value.  HON INDUSTRIES was named one of the 400 Best Big Companies
 in America by Forbes' Magazine in 2001, and one of the World's Top 100
 Best-Managed Companies by IndustryWeek for 2000.
 
     Forward-looking Statements
     Statements in this news release that are not strictly historical,
 including statements as to plans, objectives, and future financial
 performance, are "forward-looking" statements that are made pursuant to the
 safe harbor provisions of the Private Securities Litigation Reform Act of
 1995.  Forward-looking statements involve known and unknown risks, which may
 cause the Company's actual results in the future to differ materially from
 expected results, particularly those with respect to expected earnings for the
 remainder of the fiscal year.  These risks include, among others:  the
 Company's ability to realize financial benefits from reducing its cost
 structure to achieve expected financial benefit from its contract sector
 strategy, to introduce and obtain sales from new products; and other factors
 described in the Company's annual and quarterly reports filed with the
 Securities and Exchange Commission on Forms 10-K and 10-Q.
 
 
                                 HON INDUSTRIES
            Unaudited Condensed Consolidated Statement of Operations
 
     (Dollars in thousands, except per               Three Months Ended
      share data)                              Mar. 31, 2001   Apr. 1, 2000(a)
     Net sales(b)                                $461,997         $481,523
     Cost of products sold                        311,711          329,416
     Gross profit                                 150,286          152,107
     Selling and administrative expenses(b)       119,050          111,214
     Operating income                              31,236           40,893
     Interest income                                  222              289
     Interest expense                               2,922            2,839
     Income before income taxes                    28,536           38,343
     Income taxes                                  10,273           13,803
     Net income                                   $18,263          $24,540
     Net income per common share                    $0.31            $0.41
     Average number of common shares
      outstanding                              59,448,220       60,185,851
 
     (a) Includes results of operations of American Fireplace Company and the
         Allied Group acquired February 29, 2000.
     (b) Restated to include shipping and handling costs billed to customers as
         revenue versus an offset to expense per EITF issue No. 00-10.
 
 
            Unaudited Condensed Consolidated Statement of Cash Flows
 
     (Dollars in thousands)                           Three Months Ended
                                                  Mar. 31, 2001   Apr. 1, 2000
     Net cash flows from (to) operating activities    $19,663         $28,821
     Net cash flows from (to) investing activities:
       Capital expenditures                           (12,720)        (16,023)
       Other (primarily acquisitions)                  (6,744)       (134,660)
     Net cash flows from (to) financing activities     15,195         123,127
     Net increase (decrease) in cash and cash
      equivalents                                      15,394           1,265
     Cash and cash equivalents at beginning of period   3,181          22,168
     Cash and cash equivalents at end of period       $18,575         $23,433
 
 
                 Unaudited Condensed Consolidated Balance Sheet
 
     Assets                              Liabilities and Shareholders' Equity
                           As of                                As of
                     Mar. 31,   Dec. 30,                 Mar. 31,    Dec. 30,
     (Dollars in
      thousands)      2001        2000                     2001        2000
     Cash and cash                       Current
      equivalents    $18,575      $3,181  liabilities    $207,875    $264,868
     Receivables     177,592     211,243 Long-term debt   161,648     126,093
     Inventories      79,515      84,360 Capital lease
                                          obligations       1,343       2,192
     Deferred                            Other long-term
      income taxes    19,892      19,516  liabilities      19,620      18,749
     Prepaid expenses                    Deferred income
      and other                           taxes            35,755      37,226
      current
      assets          11,825      11,841
       Current                             Total
        assets      $307,399    $330,141   liabilities    426,241     449,128
 
                                         Capital stock     59,250      59,797
                                         Paid-in capital    4,278      17,339
     Property and
      equipment -                        Retained
      net            448,506     454,312  earnings        506,920     495,796
     Goodwill        221,420     216,371 Accumulated other
     Other assets     19,577      21,646  comprehensive
                                          income              213         410
                                            Total
                                             shareholder's
                                             equity       570,661     573,342
                                            Total
                                             liabilities and
       Total                                 shareholders'
        assets      $996,902  $1,022,470     equity      $996,902  $1,022,470
 
 
                          Unaudited Business Segment Data
 
                                                      Three Months Ended
     (Dollars in thousands)                    Mar. 31, 2001      Apr. 1, 2000
     Net sales:
       Office Furniture                           $366,509           $398,288
       Hearth products                              95,488             83,235
                                                  $461,997           $481,523
     Operating Profit:
       Office furniture                            $32,524            $38,572
       Hearth products                               3,238              4,770
         Total operating profit                     35,762             43,342
       Unallocated corporate expense                (7,227)            (4,999)
         Income before income taxes                $28,535            $38,343
     Identifiable Assets:
       Office furniture                           $590,319           $671,284
       Hearth products                             340,380            336,274
       General corporate                            66,203             56,745
                                                  $996,902         $1,064,303
     Depreciation & Amortization Expense:
       Office furniture                            $14,877            $14,374
       Hearth products                               5,126              3,599
       General corporate                               580                526
                                                   $20,583            $18,499
     Capital Expenditure - Net
       Office furniture                             $9,716            $10,478
       Hearth products                               2,922              4,554
       General corporate                                82                991
                                                   $12,720            $16,023
 
     For more information, contact Jerald K. Dittmer, Vice President - Finance,
 319-264-7400, or James P. McKeone, Investor Relations Mgr., 319-264-7669, both
 of HON INDUSTRIES Inc.
 
 SOURCE  HON INDUSTRIES Inc.